The following information shows the commercial potential of the Lahtojoki area. This is subject obviously, to successful sampling and development

The figures used are in public domain but give potential investors a guide to what may be possible with the right development approach.

The 2017 preliminary economic assessment (PEA) was never released in full by the Company, but claims to indicate favourable project economics. However, the main findings can be easily inferred and are independently reproduced here. The PEA has also been reported on in the Brandon Hill initiation note of January 2019

Diamond Value

The current PEA relies on an estimate of US$100 per carat which appears to be based on typical world-average diamond values, and is comparable to nearby mines in Karelian Russia.

We consider this estimate to be appropriately conservative, but subject to possible upside for the following reasons 

  1. Anecdotally and from photographic evidence, diamonds recovered in 2005-6 had a high proportion of gems, good crystal shapes and a notable occurrence of pink diamonds.
  2. Researchers have demonstrated that a significant proportion of the grade may be "locked up" in eclogite xenoliths, i.e. fragments of the earths' mantle carried up by the kimberlite. This has implications that sampling may not only have underestimated the average grade, but that the "missing" diamonds may be better preserved, and thus of better shape, quality and size, than the diamonds recovered to date.
  3. We also believe a marketing premium may apply due to the unique origin of Finnish diamonds, which could be further enhanced by marketing of fancy stones, and of gems suitable for rough diamond jewellery manufacture.

Project Economics

Accordingly, to demonstrate the potential upside, and the favourable project sensitivity to modest increases in average diamond value, we compare simplified discounted project cash flows over an initial 8 years (5.6Mt processed) at diamond values between US$100, 125, 150 and 200 per carat with Project NPV's and IRR's as per the table

Lahtojoki topline valuation with sensitivity to Diamond value

Year 0 1 2 3 4 5 6 7 8
Capex

(£20.0M)

               
Opex  

(£10.5M)

(£10.5M)

(£10.5M)

(£10.5M)

(£10.5M)

(£10.5M)

(£10.5M)

(£10.5M)

Rev  

£22.4M

£22.4M

£22.4M

£22.4M

£22.4M

£22.4M

£22.4M

£22.4M

CF

(£20.0M)

£11.9M

£11.9M

£11.9M

£11.9M

£11.9M

£11.9M

£11.9M

£11.9M

 @ $100/ct NPV   £45M

IRR   58%

 @ $125/ct NPV   £75M

IRR   87%

 @ $150/ct

NPV £105M

IRR 115%

 @ $200/ct NPV £165M

IRR 171%

Note the figures above are drawn from information in the public domain and remain the views of the EGM requisitionists. Figures assume £20M capital costs in year zero, 0.7Mt/yr at 40cpht, £15/t unit operating costs and $100-$200/carat revenue at $:£ 1.25:1. NPV @ 8%


Peer Group – Similar Mines

It all comes down to resource tonnage, overall strip ratio,  sustainable mining rate and the $/t value.

We compare some small mines to Lahtojoki below.

Kareevlei (BRD-AIM)

5 pipes 0.5-5.6Ha for 8Mt @ 0.2Mty,  5cpht @ $250 = $12/t for $2M/yr

Lerala (KIM-ASX)

5 pipes 0.2-2.3Ha for 15Mt @ 1.2Mty,   30cpht @ $100/ct = $30/t for $36M/yr

Tongo (NWF:ASX)

3 dykes 12kmx1m for 2.2Mt @ 0.35Mty,   240cpht @ $190/ct = $456/t for $160M/yr

Koidu (Octea-Pvt)

2 pipes 0.2-0.5Ha for 15Mt @1.2Mty,   50cpht @ $300/ct = $150/t for $180M/yr

Lahtojoki (KDR-AIM)

1+? Pipes 2+Ha for  ~6Mt @ 0.7Mty,   40cpht & $100+/ct =$40/t for $30M/yr *

*potentially up to $90M if the diamond value were to reach $200/ct and the mining rate could be increased to 150tph or 1Mty.


Who would you trust to try and deliver this successfully?

We ask all shareholders to give this careful thought and to please vote accordingly

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